Govt considers auto-enrolment solution for social care

According to Steven Cameron, pensions director at Aegon, social care funding needs to be at "the forefront of 'life after Brexit' government plans".

He said: "We hope the promised green paper will set out a range of ideas to generate widespread debate and intergenerational buy-in.

"Making it the default to contribute in advance towards your own social care does have appeal but with an estimated one in four needing care in later life, three in four may feel they are paying in without benefiting."

He added: "While pensions auto enrolment is a savings plan, the plans for social care may be more of an insurance contract - with everyone's contributions being pooled to pay for those who need care in future. It's untested if individuals will be happy with this or if significant numbers opt out perhaps believing they won't need care."

Jeannie Boyle, director & chartered financial planner at EQ Investors, argued that given the pressure on household finance, the take up of this idea wouldn't be significant enough to make a difference.

She said: "Why force people to choose between a pension and a care fund? Saving more into a pension would achieve the same objectives with the added benefit of tax relief. Only one on four people need care so insurance based contracts make more sense if the government will not make provision out of general taxation.”